Case Study: Using Data to Develop a Groundnut Seed Introduction Strategy in Bangladesh Maputo February 2017 FARM2MARKET Agribusiness Consulting, Inc.

Principal Crops in Bangladesh There are 19.6 million net cropped acres in agricultural production in Bangladesh. Rice alone occupies 78% of this total, occupying 15.3 million acres Oilseeds make up 584,000 acres of acreage in production, or 3% of the total Of this oilseed total, groundnuts represent only 40,000 acres, or 0.2% of total land in agricultural production FARM2MARKET Agribusiness Consulting, Inc.

Groundnut Crops in Bangladesh– Comparative Yields Bangladesh’s groundnut yields are significantly lower than average yields in China Groundnut usage is evenly split between out-of-hand consumption, and as an ingredient in snack foods Processors would prefer a lower-moisture variety of groundnut. No such varieties are cultivated in Bangladesh. FARM2MARKET Agribusiness Consulting, Inc.

Seed Procurement Channels in Bangladesh Farmer-sourced or informally-sourced, seed dominates the seed sector, representing, on average, 82% of total seed origins Public sector sources (BADC and DAE) account for almost 12% The private sector share averages 6%, ranging from a low of 0.2% for pulses, to a high of 43.6% for vegetables There are dozens of private sector companies sharing in this 6% market share, with no single company dominating across the entire spectrum of agricultural crops As regards groundnuts, the reliance on informally-sourced seed is even stronger than for the industry at large, representing 95% of total sales There is no private company role in the groundnut category, with BADC providing the only non-farmer source for seed FARM2MARKET Agribusiness Consulting, Inc.

Seed Sector Landscape – Takeaways Agriculture plays a preponderant role in the Bangladeshi economy Land utilization is dominated by rice (78% of total acreage), while groundnut (0.2%)constitutes only a niche crop Yields in Bangladesh for groundnut are materially lower than in China Farmer-sourced or informally-sourced seed accounts for 80%, on average, of all planting material for the principal crops in Bangladesh, with private sector companies contributing less than 6% of total sales When private sector suppliers set out to field trial new seed varieties, selection of farmers for field trials is typically delegated to dealers and retailers.

What Next? How can this data be converted into strategy? What are the most attractive opportunities associated with the introduction of improved varieties of groundnut seeds? What are the immediate challenges which will need to be overcome in the introduction of these improved seeds? What elements of a groundnut strategy are you able to formulate on the basis of the data you’ve just seen? What are the questions that remain to be asked in order to complete your strategy? What data do you need in order to come up with the answers?

Varietal Development Strategy -- Groundnut Why groundnuts? Low productivity compared with other global producers No low-moisture varieties available to meet demand of processors Few hybrid varieties currently in commercial distribution 95% of all groundnut seed is informally-sourced Identify six high-yielding varieties in China (3 each for processing and for fresh consumption) Research trials to define yield characteristics for each variety Simultaneous consultations with processors and farmers to confirm required product specifications Field trials of 3 best-performing varieties (chosen from original six) Initially seed will be imported from China, eventually will be propagated in Bangladesh FARM2MARKET Agribusiness Consulting, Inc.

What Research Tells Us Surveys were commissioned to conduct in-depth interviews with Bangladeshi farmers in the Jessore and Barisal areas Designed to gain insights into two key areas: How farmers decide where to access their seeds Whether or not farmers access media as part of their seed procurement process A diverse sampling of 30 farmers from various locations within the two geographical focus areas was created Farm sizes ranged from < 100 decimals to >1,000 decimals FARM2MARKET Agribusiness Consulting, Inc.

What Research Tells Us – Takeaways Dominant decision factors for seed selection by farmers: Easy access to vendor Relationship with trusted vendor Product performance/quality Subordinate decision factors: Supplier reputation, Price, Vendor or extension officer advice, Brand loyalty Strong preference for use of retained or informally-procured seed Little/no influence by media (television, radio, print) Farmers gather information from multiple sources (retailers, farmers, extension agents, manufacturers, media), but do not believe everything they hear FARM2MARKET Agribusiness Consulting, Inc.

What International Best Practice Tells Us —Takeaways Successful pioneer firms continually focus on providing farmers with information regarding the “Four A’s”: Awareness, Advantage, Affordability and Access Successful pioneer firms work to build repeatable models that allow them to expand into new territories, and to incorporate new products into their line of offerings It is important to build feedback and learning systems which allow for continual adaptation and innovation Farmers have grown accustomed to product adulteration and mis-representation, and discount vendor claims accordingly. Insuring that new products keep their promises is essential for a successful introduction. FARM2MARKET Agribusiness Consulting, Inc.

What Practitioners Tell Us — Takeaways Adopt aggressive marketing strategies that use promotional incentives to cultivate smallholder early adopters during the launch phase of a new product Limit risks by having promotional tactics that encourage farmers to use only a small portion of their land for testing new seeds Always better to under-promise and then over-perform Leveraging enthusiastic early adopters can make a critical difference through referral programs and testimonial advertisements Dealers and retailers should be carefully schooled in the care & feeding requirements of each new variety, so they can communicate these requirements effectively to their customers Disappointing results  Unsuccessful product launches FARM2MARKET Agribusiness Consulting, Inc.

What Dealers Tells Us — Takeaways (1) Good product performance – in terms of yields, flavor and appearance – trumps all other considerations in determining the success of a new variety First impressions are critically important; what dealers see at (or hear from) field trials determine what new varieties they will take on Dealers typically take on only 4-5 new varieties per year. Dealer loyalty is divided across many competing suppliers Farmers call the shots in terms of what new seed varieties dealers take on FARM2MARKET Agribusiness Consulting, Inc.

What Dealers Tells Us — Takeaways (2) Dealers’ shelves are already crowded, with 50-200 different varieties typically in inventory. In most cases, space for new varieties is made by the elimination of old varieties Dealers welcome new varieties – provided they perform well The 95% portion of the groundnut seed market controlled by “retained seed” is distributed through specialized retailers operating at village-level bazaar markets. Conventional dealers and retailers have little understanding of this distribution network FARM2MARKET Agribusiness Consulting, Inc.

What recommendations would you make to this client regarding its groundnut introduction strategy? Research trials Field trials Grower outreach Short-term Long-term Product integrity Distribution channels Immediate introduction of multiple varieties FARM2MARKET Agribusiness Consulting, Inc.